Thu, 28 Aug 2003

Govt expects successful sales of PGN, BRI

The Jakarta Post, Jakarta

The government hopes to raise about Rp 3 trillion (US$361.44 million) from the sale of two state-owned companies later this year.

The two companies are gas distribution firm Perusahaan Gas Negara (PGN) and Bank Rakyat Indonesia (BRI), Minister of Finance Boediono said on Thursday.

"We are hoping that the sales will be successful and will meet our target of Rp 6.2 trillion this year," Boediono said during a hearing with the House of Representatives' budget commission.

The hearing follows a meeting on Wednesday that saw Boediono propose 2003 budget revisions, including the downward revision of the privatization revenue target, from Rp 8 trillion to Rp 6.2 trillion.

Boediono said the government had no choice but scale down the target following its failure to unload three state companies that had been scheduled for sale this year.

The three are pharmaceutical companies PT Kimia Farma and PT Indofarma, and airport operator PT Angkasa Pura II.

"It seems that the three companies are not yet ready to be sold, and we still need to clear up some things up first," the minister said, adding that the three would likely be included in next year's privatization program.

A day earlier, the government said disappointing privatization proceeds had contributed to less-than-expected full-year revenue.

The shortfall also is the result of lower tax revenues, which had been targeted at Rp 241.7 trillion but is likely to reach only Rp 235.9 trillion.

That, coupled with rising expenditures, is expected to widen the state budget deficit to about 2 percent of the country's gross domestic product (GDP), or Rp 35.1 trillion, higher than the target of Rp 34.4 trillion.

As a result, the government is now looking to increase its revenues from other sources to help plug the deficit. Not only is the government planning to increase its issuance of state bonds this year, from Rp 7.7 trillion to Rp 11.7 trillion, it also is preparing to convert Rp 4.8 trillion worth of bonds from the Indonesian Bank Restructuring Agency (IBRA) into cash, raising the revenue collected from the agency to Rp 22.5 trillion.

IBRA had earlier been expected to contribute about Rp 18 trillion in cash and Rp 8 trillion in bonds to the state coffers.

Boediono said that as of August, proceeds from privatization had reached Rp 2.54 trillion, all coming from the sale of part of the government's stake in Bank Mandiri.

The government recently sold a 20 percent stake in the bank in the country's most successful initial public offering in history.